EVEN though agriculture cannot be covered by an Emissions Trading Scheme (ETS), the Australian Government must take steps to ensure consumers can still afford basic food items as substantial price hikes become ‘the norm’, the National Farmers’ Federation (NFF) warned today.

“Any ETS will cause pain to businesses and households... people are slowly coming to grips with that reality,” NFF President David Crombie said. “But it could be crippling for Australia’s food production, threatening to damage our national self-sufficient food supply and slashing at our international competitiveness if we get it wrong.

“We need assurances and tangible recognition that our farmers’ competitiveness – both exporters and those exposed to cheaper imports – will not be sacrificed at an ETS altar.

“As Ross Garnaut and the Productivity Commission have both highlighted, even while it is impractical for agriculture to be covered by an ETS, the farm sector will bear the brunt of massive price hikes to up to half of its cost base.”

For example, Australian Bureau of Agriculture and Resource Economics data reveals that for sectors like cropping, 45% of their input costs are energy dependent – including fuel, electricity and other energy-dependent costs, such as freight, fertilizers and crop contracting.

“All of these costs will rise dramatically under an ETS,” Mr Crombie said. “Assuming those costs are passed on, as is the intention, Australians will pay a premium for essential foods.

“Meanwhile, our $30 billion-a-year agricultural export market will struggle to maintain customers – a disturbing and ironic twist, in that, our trade partners will source cheaper food from countries with polluting farm systems and who do not have an ETS or its cost pressures.

“Our Government, in designing an ETS, must take account of Australia’s low-emission and environmentally-sustainable farm production to ensure it is not traded-off as a perverse and out-of-kilter response.

“Australian agriculture accounts for 12% of GDP, underpins 1.6 million Australian jobs and produces 93% of Australia’s daily domestic food supply. Our local food production and our overseas customers must not be compromised by an ETS.

“Rather, acknowledging the massive cost increases to the farm sector and the need to off-set these with incentives to further reduce carbon emissions – while ensuring ongoing production and productivity – must be a priority.

“As New Zealand’s ETS analysis has shown – a 160% cut to farm margins – the impacts for agriculture are dire. Now that the Kiwi’s are backing away from agriculture’s coverage under an ETS, we must ensure we don’t make the same mistakes.”